Four people, including Denis Donaldson, head of Sinn Fein's administration at
the Northern Ireland Assembly, were charged last month after police seized hundreds of documents in raids on republican homes.

Mr Blair refused to give in to Mr Trimble's demands to have the two Sinn Fein ministers expelled from the executive.

A spokesman for the Police Service of Northern Ireland said they could not comment on specific details about the latest arrest but confirmed a man was detained late on Wednesday afternoon.

He described the development as "very serious" and said he had spoken to Mark Durkan and David Trimble.

NI Secretary Paul Murphy: "Serious development"

Sinn Fein's Conor Murphy said there was now a growing belief that there was a witch-hunt against Catholic civil servants.

"Many people are now considering there is some form of a McCarthy-type witch hunt against Catholic civil servants who happen to live in nationalist working class areas," he said.

Loyalists warned

The prime minister's spokesman said it was important that the police continued to investigate the allegations.

The development underlined the prime minister's belief that the issue of trust needed to be addressed, he added.

Meanwhile, the BBC has learned that a number of loyalists were visited by the police on Thursday morning to inform them that their personal details were contained in documents seized as part of the Stormont spy inquiry.

Davy Adams: "I am angry I wasn't informed"

Names, addresses and other information about the loyalists in Belfast and other areas were allegedly on a document recovered in October as part of the investigation into alleged IRA spying.

A police spokeswoman said: "This notification process is part of an ongoing operation to inform people of the situation and brief them on improvements to their personal security."

One of those named on a list was David Adams, a former Ulster Democratic Party spokesman.

He said he was "very angry and concerned" that the police had not informed him and that he had had to hear about the list from the BBC.

After the first seizures, the police began alerting about 2,000 prison staff in Northern Ireland that their personal details were in the hands of republicans.

Later on Thursday, the Irish Foreign Minister, Brian Cowen, is due to meet delegations from the Ulster Unionist Party and the Women's Coalition in Belfast on Thursday as the government prepares to review the implementation of the Agreement with the parties.

Mr Cowen is to meet Sinn Fein, Progressive Unionist Party and Alliance Party leaders on Friday.